Gold prices have begun firming in the past month or so, after Israel began threatening to launch air strikes against Iran's nuclear facilities.
Western nations have slapped an oil embargo on Iran for suspected development of nuclear weapons. Equities markets in America, Europe and Asia have been spooked by this geopolitical development, with analysts and strategists talking of a gloomy scenario in the months ahead.
Gold on the other hand has started firming as a safe-heaven investment option. In an interesting development, Iran's central bank governor has said the country was willing to accept gold as payment for oil, bypassing the sanctions imposed by the United States and Europe.
Investment firm Threadneedle's chief investment officer, Mark Burgess, says that while some view this as potentially a significant source of demand, he believes the story is irrelevant in terms of its impact on gold.
As an academic exercise, however, the numbers are interesting. Assuming Iran exports two million barrels a day, at present oil prices, the value of one year's production is about US$90 billion.
This is equivalent to about 1,700 tonnes of gold, which itself represents a whopping 60 per cent of annual gold production. This is why gold insiders are touting the story as a bullish one for the metal.